SHUSTER: Senate Republicans thwart the efforts to pass the bill, and now, the pressure is on for the White House to do something.

(BEGIN VIDEO CLIP)

SEN. CHRIS DODD, (D) SENATE BANKING COMMITTEE: There needs to be action. To just walking away from this and hoping the worst does not happen is unacceptable.

(END VIDEO CLIP)

SHUSTER: Is the GOP trying to union-bust and at what cost?

(BEGIN VIDEO CLIP)

RON GETTELFINGER, UAW PRESIDENT: They thought perhaps they could have a twofer here, maybe - you know, pierce the heart of organized labor while representing the foreign brands.

(END VIDEO CLIP)

SHUSTER: What's next for Detroit and for the millions of auto workers?

Meanwhile, this guy is still governor, but for how long? The Illinois attorney general files a motion with the state Supreme Court to remove Rod Blagojevich from office.

(BEGIN VIDEO CLIP)

LISA MADIGAN, ILLINOIS ATTORNEY GENERAL: State government is paralyzed by a governor who is incapable of governing.

(END VIDEO CLIP)

SHUSTER: This as the governor's chief of staff resigns and an Illinois state senator says there was open knowledge that the governor wanted to appoint someone who would benefit him. What does Blagojevich have left? A "Hail Mary," by inviting ministers into his home to pray.

The election autopsy: A Harvard forum substitutes as a campaign postmortem with McCain and Obama insiders giving their views on how events played out, while Colin Powell says the GOP's campaign strategy went to the extreme.

(BEGIN VIDEO CLIP)

COLIN POWELL, FORMER U.S. SECRETARY OF STATE: Governor Palin, to some extent, pushed the party more to the right and I think she had something of a polarizing effect.

(END VIDEO CLIP)

SHUSTER: But there's one person who doesn't want to talk about the election.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) ARIZONA: I don't want to talk about the bleeping campaign. Do you understand?

(LAUGHTER)

MCCAIN: If you think I'm going to go back to that bleeping situation, then bleep you.

DAVID LETTERMAN, TV HOST: OK, thanks. Whoa.

(LAUGHTER)

(END VIDEO CLIP)

SHUSTER: Where was this John McCain during the campaign?

All that and more: Now on Countdown.

(BEGIN VIDEO CLIP)

MCCAIN: You would (ph) have thought I won.

(LAUGHTER)

(END VIDEO CLIP)

SHUSTER (on camera): Good evening. This is Friday, December 12th, 38 days until the inauguration of President-elect Barack Obama and 58 years next month since Republican president, Dwight D. Eisenhower sent General Motors president, Charles Wilson to the Senate for confirmation as defense secretary. A senator asked Wilson whether he could make decisions that might be adverse to G.M. Wilson replied, "I cannot conceive of one because for years I thought that what was good for our country was good for General Motors."

Our fifth story tonight: The end of an era as we learn that Senate Republicans are now willing to kill G.M., regardless of whether it's good for our country, in order to kill the union of G.M.'s workers.

The White House today announced it will take steps to prevent both G.M. and Chrysler from failing, possibly dipping into the financial sector bailout fund, the available batch having left approximately $15 billion, almost exactly the amount that was in the bill that fell short in the Senate last night despite backing from the House and the White House and a majority of the Senate.

So, what were the sticking points for the Republican minority? Republicans insisted that the United Auto Workers take a pay cut next year, even though the union had already made concessions on healthcare for workers, healthcare for retirees, supplemental income for laid-off workers and even its wages.

In talks last night, the union even agreed to Republican demands that their pay equal the pay at non-union foreign-owned plants. Republicans wanted the union pay cuts next year. The union said either all stakeholders - management, creditors, investors would have to come to the table for across the board renegotiations, or the pay cuts would have to wait until 2011 when the current contract expires. Republican insistence on that two-year difference in pay, which makes up only 10 percent of every car's cost by itself, is not sufficient to establish that Republicans put politics ahead of country here in order to kill or cripple the union.

But today, the union chief revealed some of what happened at last night's talks, with Republican Senator Bob Corker, after the union agreed to some of those concessions.

(BEGIN VIDEO CLIP)

GETTELFINGER: As Senator Corker recognized, these agreed-to changes would have made an enormous difference in the balance sheets of the companies and largely solved their financial problems. Senator Corker admitted to our people, on the ground there, that the other discussions over wages were largely about politics within the GOP caucus.

(END VIDEO CLIP)

SHUSTER: Some Republicans, however, claimed the union killed the bailout. Senator John Ensign, quote, "The UAW walked away from a very reasonable deal." Senator Jim DeMint, quote, "It sounds like the UAW blew up the deal."

It may sound as though Ensign and DeMint really wanted a deal, if only it weren't for the gosh darn UAW, but there's no way to assess who really wanted to block the bailout of America's auto industry - unless you were to read this memo obtained by Countdown which Senate Republicans circulated internally on Wednesday morning, well before the House had even passed its version of the bill, quote, "Senators Ensign, Shelby, Coburn and DeMint, the message they want us to deliver is: This is the Democrats first opportunity to payoff organized labor after the election. Republicans should stand firm and take their first shot against organized labor. If we can hold the Republicans, we can beat this."

Today, G.M. announced it will temporarily shut down most of its North American plants for much of the first quarter of 2009.

Right now, we're joined by MSNBC political analyst, Jonathan Alter, also, senior editor at "Newsweek" magazine and author of "The Defining Moment: FDR's Hundred Days and the Triumph of Hope."

Jonathan, good evening.

JONATHAN ALTER, MSNBC POLITICAL ANALYST: Good to see you, David.

SHUSTER: We're going to get to the union-busting. First, what happens now? What are the White House options that it is considering this weekend?

ALTER: Well, those options are narrowing, but it's basically to kick the can down the road. You know, Congress approved half of the $700 billion in what are called "TARP money" for financial industry, $350 billion of it at a time. They've spent $335 billion. So far, that leaves by sheer luck $15 billion that can be spent and that is precisely the number that the auto industry needs to at least get into the beginning of next spring without going out of business.

SHUSTER: Let's suppose the Bush administration does dip into the TARP or the Treasury Department finds the funds in Cheney's vault, what are the restrictions or the strings that the Bush administration can attach to that money?

ALTER: Well, it's interesting. You know, the strings for Wall Street were very, very few. You've got these guys at the Treasury Department who can basically shovel out the money to Wall Street. I think because those strings are very few, I'm not sure they'll be able to just willy-nilly attach strings under the legislation of a couple of months ago. So, it may be, ironically, for Senate Republicans that there are fewer strings attached to the $15 billion that comes from TARP than there would have in the bill on the Hill.

SHUSTER: Ironically, was Vice President Cheney who warned Republicans if they did not pass this auto bailout bill, it's Herbert Hoover time. Is he right?

ALTER: Yes. Of course.

SHUSTER: Did he just write his own legacy?

ALTER: Well, you know - that would be maybe a little bit premature, but the point is that if the auto industry went into bankruptcy, there would be literally millions of people thrown out of work. So what Cheney was talking about was that when that happened, under Herbert Hoover, it absolutely destroyed the Republican Party for more than a generation, because that was on their head.

And what Cheney was saying to these recalcitrant Republicans was - look, if we win on this, this is on our watch. Not just my and Bush's watch, but the Republicans' watch. That they will be seen as the ones who threw millions of people out of work, it will take us another generation to live it down, as it did Herbert Hoover.

It turned out that there were enough Republicans who weren't listening, because the president and the vice president are no longer running their party.

SHUSTER: What do you make of this memo that we got a copy of? It's called "Action Alert," simply for Senate Republicans to essentially get the union. What do you make of it?

ALTER: I just thought it was fascinating that you came up with this, because rather than, you know, taking a kind of statesman-like approach which is that it's wrong for taxpayers to bail out irresponsible management, something like that would at least be principled. This was a partisan sledgehammer at organized labor. And even if you think that labor needs to be make more concessions, this was a real insight into the kind of nasty core of the Republican argument.

I don't think it's worthy of some of those more principled conservatives who are taking a - you know, a more legitimate kind of free market attitude towards this. This had a nastiness to it that was fascinating.

SHUSTER: And some of these senators, of course, represent southern states which are a long time anti-union which also don't have the same sort of protections for the foreign autoworker, foreign company autoworkers in their state. And yet, of course, that wasn't an issue that the senators wanted to bring out.

In any case, Jonathan Alter, thank you very much. We appreciate it.

ALTER: Thanks, David.

SHUSTER: If the GOP is seen as trying to kill or cripple G.M. and Chrysler in order to punish hundreds of thousands of American workers for supporting Democrats, today's news could represent a sea change, not just for the economy, but for American politics.

Joining us now to weigh in is Air America Radio's Thom Hartmann.

And, Thom, thanks for your time tonight.

THOM HARTMANN, AIR AMERICA RADIO: Hi, David.

SHUSTER: By telling the industrial Midwest to essentially go to hell, is the GOP making a conscious decision that, "Well, look, we've lost every region of the country but one. So., OK, America, it's 1860 all over again, bring it on"?

HARTMANN: Well, it's not about north versus south or region versus region; it's really about busting unions, that's the bottom line.

The reality, David, is that if we didn't have a strong organized labor, strong - it's weakened relative to when Reagan came into power, but if there wasn't an organized labor movement in the United States right now, John McCain would probably be president. And this is an opportunity to continue the process that Ronald Reagan began in '81,'82 when he busted PATCO and tried to, you know, blow up another couple million union jobs.

The Republicans see the union movement as, not only a natural constituency of the Democratic Party, but also as one of the major - actually, the only large major organized relatively progressive movement in the United States. And they need to get rid of that if they're going to get power.

SHUSTER: And as a result then, are the car companies getting unfairly scapegoated to some extent here? I mean, yes, they were slow to respond, but they did respond. And before the restructuring and new cars to come on line (ph), weren't they hit by a double whammy? High gas prices and the credit crisis that were actually not free market anomalies but the very predictable result of Republican policies?

HARTMANN: Well, yes. And the proof of that - and, in fact, these Republican policies, this 26, 28-year war on organized labor and basically on the middle-class that we've been seeing ever since Reagan here in the United States, and now it's going worldwide, although Margaret Thatcher played her role on that, too, back in the day.

The proof of that is what happened in Sweden this morning. The Swedish legislature appropriated $3.2 billion - if my memory serves me write - which is a lot of money in a little country for a little car industry, to bail out Saab. And, you know, this is happening all over the world. Honda and Toyota in Japan are cutting back on their production, as well as in the United States.

So, the Republicans here saw the unionized American auto industry as being weak and like predators, I mean, they're jumping on it. They're going to try to take down the union. This is their opportunity to kill the union.

SHUSTER: And one of the people in the talks at the Capitol last night was Stephen Feinberg, he's the head of Cerberus hedge fund that owns most of Chrysler. Another big Republican, former Bush treasury secretary, John Snow, is also at Cerberus. Why aren't Republicans demanding that this massive hedge fund put some money into Chrysler? Even if we do end up helping workers, are we basically just propping up yet another rich boy's club?

HARTMANN: Well, it's - you could argue that, but really, what is going on here has nothing to do with Cerberus, or with Chrysler, or with Ford or G.M., it has to do with trying to get rid of organized labor. And, you know, that's why they're throwing all this effort at it.

And the tragedy is that they're willing to take down not just the direct autoworkers - My dad worked in a tool and dye shop in Lansing, Michigan for 40 year. It was, you know, Lansing Tool and Dye. It wasn't the Big Three. But I guarantee you, his jobs and all the other people who worked on that tool and dye shop depended on the auto industry. There are millions of jobs like that around America and they're all going to go, or many of them are going to go if these companies go down.

And, from the Republicans point of view, the good part about that is that they're union jobs. And maybe those shops will then get picked up by Toyota or Mercedes or something like that. The bad thing about America is, number one, it gets rid of the union movement, number two, all the profits from those companies then go to countries outside the United States. So, it's a slow bleeding of the country.

SHUSTER: How do we return to an economy that's based on actually making things? I mean, what does President-elect Obama need to do when he gets in office to wean our economy off of these made-up financial games and get back to real manufacturing?

HARTMANN: David, what he needs to do immediately is read Alexander Hamilton's 1791 report to Congress on manufactures. Hamilton laid out a six-step plan to build an industrial economy in the United States, and we followed it. Congress actually put it into place in 1792, and it stood until Ronald Reagan came along and started deconstructing this, followed by George Herbert Walker Bush, Bill Clinton and George Bush now, and the legislatures mostly pushed by the Republicans taking this thing apart.

I mean, you could argue that some of us started with Charles Hartley (ph), but basically the founders laid this thing out. They had it figured out and it worked. We built the biggest industrial infrastructure and industry economy in the world. We have gone - when Reagan came into office, we were the largest exporter of manufactured goods and the largest importer of raw materials on the planet, and the largest creditor. And more people owed us money than anybody else in the world.

Now, just 28 years later, we're the largest importer of finished goods, manufactured goods, exporter of raw materials, which is kind of the definition of a third world nation, and we're the most in debt of any country in the world. This is the absolute consequence of Reaganomics.

SHUSTER: Thom Hartmann, Air America Radio host - Thom, thanks for joining us. Good of you to be here.

HARTMANN: Thanks so much, David.

SHUSTER: Confirmation, as if more was need that Governor Rod Blagojevich tried to sell Obama's Senate seat from one of the candidates he tried to sell it, too. This as the Illinois attorney general asked the state's Supreme Court to remove Governor Blagojevich from power. That's ahead on Countdown.

(COMMERCIAL BREAK)

SHUSTER: His chief of staff quits but the governor of Illinois is still hanging to power, even as his own attorney general tries to forcibly remove Rod Blagojevich from the governorship. And he was warm and funny and charming, so, where was the John McCain we saw last night on "Letterman" during the presidential campaign?

(COMMERCIAL BREAK)

SHUSTER: In a season of giving, it's a story that keeps on giving.

And in our fourth story on the Countdown: Unless Illinois state officials succeed in removing hot Rod Blagojevich from power forcibly, the corruption scandal surrounding the Illinois governor might keep on giving, and giving, and giving for quite some time.

Three days after Governor Blagojevich was arrested on federal corruption charges, and he seems no closer to resigning, as if this week had been like any other. Not so much, his chief of staff who was also arrested today, John Harris, the other voice in those colorful expletive "needs to be deleted" transcripts, quit this morning.

In other developments, Illinois State Senator Kwame Raoul told the "New York Times" that he was pressured by the governor to offer something of tangible value in order to be considered for Obama's open Senate seat. Instead, Mr. Raoul says he withdrew his name from consideration.

And the "Chicago Tribune" reports that businessmen with ties to Congressman Jesse Jackson, Jr. met with Governor Blagojevich on October 31st to discuss raising at least $1 million for the Blagojevich campaign to encourage him to pick Congressman Jackson. A fundraiser for Blagojevich was held in Chicago Saturday. Congressman Jackson's brother was among those who attended.

Meanwhile, the Illinois attorney general took the extraordinary step today of asking the state Supreme Court to temporarily remove the governor from office on the grounds that he's unfit to serve because of a disability.

(BEGIN VIDEO CLIP)

LISA MADIGAN, ILLINOIS ATTORNEY GENERAL: I recognize that this is an extraordinary request, but these are extraordinary circumstances. As governor, Mr. Blagojevich's duty is to do what is best for the people of the state of Illinois, not for himself. In light of his arrest and the filing of the criminal complaint, Governor Blagojevich can no longer fulfill his official duties with any legitimacy.

(END VIDEO CLIP)

SHUSTER: Let's turn now to Chris Cillizza, a White House reporter for the "Washington Post," and the author of "The Fix" at WashingtonPost.com.

And, Chris, great to see you tonight.

CHRIS CILLIZZA, WASHINGTONPOST.COM: David, thanks for having me.

SHUSTER: Sure. However eager most people might be to see Governor Blagojevich out of office, in terms of precedence, would it seem to be something of a long shot that the state Supreme Court is going to want to try to remove a governor from office on the grounds he's disabled or otherwise unfit to serve?

CILLIZZA: But I do think, yes. It seems to me in reading this clause, it's intended for someone who is incapacitated in some way, shape, or form to ensure continuity of government, not necessarily to take out someone who has clearly exercised extremely poor judgment, but I'm not sure there's anything medically wrong with Rod Blagojevich that would suggest he should be removed from office. I still think the impeachment proceedings which we expect to, at least, be debated early next week in Illinois State House and Senate, I still think that's the more likely way to remove him if he chooses not to resign.

SHUSTER: And how quickly can the impeachment route actually go?

CILLIZZA: Well, that's the problem, and it's the same thing with the special election, is that these - the impeachment in the Illinois legislature is very similar to impeachment processes in the federal government. The House would be majority vote, it would then go to the Senate. A trial overseen by the Illinois - chief justice of the Illinois state Supreme Court, and a 2/3 majority needed to convict him. That's not a process that might happen very quickly. And Blagojevich can throw in roadblocks if he so chooses.

Again, it would seem as though the writing is on the wall here. His chief of staff is gone. A deputy governor is gone. Everyone from Barack Obama to Harry Reid to Dick Durbin has called for him to resign. But Rod Blagojevich seems to be somewhat deluded into believing that he can stay in office.

SHUSTER: In the quid pro quo sweepstakes, did things appear to go from bad to worse for Congressman Jackson with that fundraiser report in "The Tribune" today?

CILLIZZA: You know, again, I say that I'm not a lawyer, but I will tell you, I do know something about politics - and perception matters in politics, David, as you know. And it doesn't look good. Jesse Jackson, Jr. has said, "Yes, I am 'Senate Candidate Number Five.'" He has said, "I had no knowledge of anything that Rod Blagojevich was talking about, I did not send an emissary," but it doesn't look good that there was a fundraiser with his brother, with people who are affiliated with Jesse Jackson, Jr.

I think it's going to be very hard for him, no matter how this winds up playing out. Whether it's an appointment or whether it's a special election, it's going to be hard for him to make the case that he represents a real break with the past right now. And that's a blow because he is someone who worked very aggressively to be appointed to the Senate.

SHUSTER: And as far as Governor Blagojevich is concerned, with all this pressure that's building on him and the image of him in this undisclosed location, essentially, with no friends, no friends politically, nobody who wants to talk with him and everybody saying, "Resign," how long can he continue in this fashion?

CILLIZZA: You know, David, I hesitate to make a prediction. I would have guessed he probably would have stepped aside before now. He can continue on until someone tells him, you have to get out of the office, whether that's the Lisa Madigan, and, you know, the unfit petition she's making, whether that's the legislature. But if neither of those two things happened, he can stay on as long as he likes.

He is probably already a political dead man walking. I can't imagine he could ever run for anything else. So, at this point, it's really a decision to him - himself, his wife and his family on how long he stays and I can't imagine he would want to continue with this sort of millstream surrounding him. But, you know, strings (ph) of things have happened.

SHUSTER: Yes, and I suppose it's also hard to convince people who are delusional to think logically. But, in any case, Chris Cillizza, White House reporter for the "Washington Post" - Chris, thanks for coming on.

CILLIZZA: Thank you, David.

SHUSTER: Is that snow - indoors? Oddball is ahead.

And so much for Bush doing anything he can to help the incoming president. He won't even give up a spare house for him to move in early so the girls can go to school. Two children left behind - ahead on Countdown.

(COMMERCIAL BREAK)

SHUSTER: If it feels like the transition from President Bush to President Obama is taking a remarkably long time, that's because compared to the last transition, it is. That's because tomorrow, December the 13th is the eight-year anniversary of Vice President Al Gore reconceding the 2000 election to then-Governor Bush. The recount lasted over a month and Governor Bush had less than 40 days to cram for his transition and take the oath. Al gore used that time to start working on that killer beard.

Let's play Oddball.

We begin with a chopper Oddball shot from the skies above the Long Beach airport, where we see (INAUDIBLE) the results of a freak blizzard inside a hangar, or somebody is in a butt load of trouble. That is six feet of synthetic high-expansion foam. It's a fire suppression system that was mistakenly set off, even though there was no fire.

And if you think the after picks are cool, this is the before pics. In an unrelated demonstration, you can see how the suds pour out of the roof. It looks like fun but it's an expensive mistake. Police say a helicopter and a few cars yanked from the scene may be destroyed and they're blaming the accident on an airport technician named Bobby Brady (ph).

A little further north, in California, finals week on the campus of UCLA means the annual rite of passage known as the "undie run." This footage were shot for the "Los Angeles Times" Web site. These are students blowing off some steam by stripping down to their skivvies and running a few laps around campus. Of course there is no empirical evidence proving that prancing around in your underpants improves scholastic performance, but you can't argue with this b- roll.

Historians note that UCLA's first undy run was way back in 1956 and featured Lew Alcindor running around in his boxers. No, I made that last part up.

Finally it's a California trifecta. This time an attempted robbery in orange. This is surveillance video of a couple of pathetic youths attempting to knock over a 7-eleven. And the jerk in the white shirt needs to work on his vertical. He may not win any high jump competitions. But the guy did eventually get over the counter. The punks got away with a few hundred dollars, which is small compensation for this embarrassing video and the nationwide ridicule.

"CSI 2008" the public autopsy on Obama versus McCain. And the election still not over in Minnesota, but a major decision on ballots brings the end ever nearer. These stories ahead. But first, time for Countdown'S top three best persons in the world.

Number three best bearing a lead in a report filed by the congressional oversight panel for economic stabilization which is monitoring the bailout under the heading "future oversight activities." The panel says they will hold a series of field hearings to understand the cause of the economic meltdown. And where will the first of these hearings be held? Vegas. Of course, I can see our future now, 99 cent shrimp cocktails, all you can eat buffets and two for ones to see Wayne Newton at the Aladdin, just so folks can learn in a different environment about the awful Wall Street ponzi schemes that put us in a world of hurt.

Number two, best excuse for being double book. Republican Senator Arlen Specter. On Wednesday he asked the date to the January 8th start date of Attorney General Nominee Eric Holder's confirmation hearings, claiming the background check and nominee questionnaire would not be completed in time. But it could be that Specter (p) has other plans, like a congressional junket to England, Austria, Syria and Israel this holiday aboard a U.S. Air Force jet. Who's in the delegation with Senator Specter you might ask? Mrs. Arlen Specter. Only Mrs. Arlen Specter. Hey, honey, look, it's Big Ben. And there's Parliament.

And number one, best icing the kicker with or without the ball. Turns out Specter isn't the only GOP'er asking for more time on the Holder hearing. Senator Jon Kyl of Arizona is also asking for more time for review. Fiduciary Chairman Pat Leahy shot back quoting a republican senator's point about the importance of speedy confirmation hearings during the one from Michael Metazy last year, quote "attorney general nominees have been confirmed on average in approximately three weeks, with some being confirmed more quickly."The author of that remark promoting the need for speed last year? Yep, Senator Jon Kyl of Arizona. Flag on the play, delay of game, repeat first down.

(COMMERICAL BREAK)

SHUSTER: We lost. We were happy it was over. Resignation and relief expressed by John McCain's chief campaign pollster after being asked whether a few more weeks would have helped pull out a victory.

Our third story in the countdown; stunning revelations last night during election post mortem held at Harvard University. Rick Davis, McCain campaign manager, had plenty to say about his former client who wanted a quote "redo on that remark about the economy being fundamentally strong and placed much of the blame for their loss squarely on the White House."

(BEGIN VIDEO CLIP)

RICK DAVIS, JOHN MCCAIN CAMPAIN MANAGER: There's no question that the war in Iraq and our involvement over there continued to plague us as a party and as a candidate for that party who was seen as, you know, that was our connection to the Bush Administration.

(END VIDEO CLIP)

SHUSTER: As for Sarah Palin, Davis spoke of the few options the campaign felt it had for vice presidential candidates. Quote "We have to work on our bench." The Obama side had fewer recriminations, of course, but former Campaign Manager David Plouff did admit to some panic during the primary fight with Senator Clinton. When the Jeremiah Wright controversy first erupted.

(BEGIN VIDEO CLIP)

DAVID PLOUFF, OBAMA CAMPAIGN MANAGER: The ferocity of which we dealt with that I think took us by surprise. I think SHUSTERs could tell that we were taken by surprise. And it was a moment of great peril.

(END VIDEO CLIP)

SHUSTER: Then David Axelrod incoming senior advisor to Obama described the frenzied hours leading up to that the speech on race Obama wrote and delivered last spring.

(BEGIN VIDEO CLIP)

DAVID AXELROD, POLITICAL CONSULTANT: And I woke up about 2:00 in the morning and there was the speech on my Blackberry and I spooled through the speech and I got to the end of it and I emailed him back and I said this is why you should be president.

(END VIDEO CLIP)

SHUSTER: In another post mortem item, former Secretary of State Colin Powell told CNN that the Republican Party needs to reexamine its polarizing strategy if it wants to win.

Then we continue to listen to Rush Limbaugh is this really the kind of party that we want to be when these kinds of spokespersons seem to appeal to our lesser instincts rather than our better instinct. Then up came the name Sarah Palin again.

(BEGIN VIDEO CLIP)

COLIN POWELL FORMER SECRETARY OF STATE: Governor Palin to some extent pushed the party more to the right. And I think she had something to a polarizing effect when she talked about small town values are good. Well most of us don't live in small towns. Well I was raised in the South Bronx and there's nothing wrong with my value system from the South Bronx.

(END VIDEO CLIP)

SHUSTER: For some post mortem analysis we are joined tonight by Democratic Strategist Chris Kofinis, and Chris great to see you.

CHRIS KOFINAS, DEMOCRATIC STRATEGIST: Good evening David.

SHUSTER: Well, Chris based on everything we've now heard, what surprised you most about what was said last night?

KOFINAS: You know, I think what was surprising was Davis' comment about how the republican primary hurt John McCain's maverick brand. I mean, it's kind of interesting if you think about it, what that basically is saying is it wasn't the democrats or the Obama campaign that destroyed John McCain's maverick image, it was the republicans. You know, I think it's a little bit revisionist. Part of it is I think it was the reality that it wasn't by accident; it was a strategic choice by the John McCain campaign to move to the right. I think it kind of ties to what, you know, Colin Powell has mentioned and that others have mentioned. That their desire to kind of win over their base haunted them all the way to the end of the election, and instead of focusing on Obama, they seemed to be more focused more on keeping their base together and it proved too much.

SHUSTER: Chris what is the most important thing that all of us, journalists, strategists, pundits have learned about this campaign now that we've had some time and space to reflect?

KOFINAS: Well, you know, I look at it from my perspective. You know, what I learned from it is that message, discipline and a focused, well put together team matters. I mean, I think when you listen to what the Obama folks, Axelrod and Plouffer were talking about, in terms of their strategy and in terms of their message, they decided on it and they were focused and disciplined all the way through.

There may have been certain moments that they may have had to kind of adapt, but they stuck to a very specific strategy. Whereas the McCain campaign was this kind of model of chaos and dissension and I think that really hurt them. And I think it's a very telling lesson that in this kind of business, in politics, your worst enemy is not necessarily your opponent. It can be your own campaign.

SHUSTER: Do you think that, Chris, that John McCain was handcuffed by the extreme right? Was he in control of his campaign and image or was it essentially taken out of his control?

KLOPONIS: You know, the argument - you know, at the end of the day, a candidate is responsible for their campaign. You know, consultants and advisers can maybe push a candidate to a certain direction, but they make that decision. And so his decision to move to the right, to kind of walk away from the maverick image that, you know, basically put him on the scene in 2000 and kind of bear hugged Bush and his policies was a decision they made. And I think it was a deadly one. Now, people are going to argue there was no other decision to be made. I wonder about that. It makes you - you know, it's tough to say sometimes, but you wonder if they had decided to run as kind of an independent maverick candidate . Would they have more competitive in the general? I think they would have been. The irony is they probably wouldn't have been able to win the republican nomination.

SHUSTER: Democratic Strategist Chris Kofinas. Chris, thanks for joining and have a great weekend.

KOFINAS: Thanks, David, you too.

SHUSTER: One of the biggest transition issues for the incoming first family is their actual move to Washington D.C. and the effort to get daughters Sasha and Malia acclimated to their new school which starts in early January.

So when the Obamas learned that Blair House across the street from the White House was reserved for them in mid-January leading up to the inauguration, they asked if they could start living there 10 days earlier. The answer from the Bush White House team? No. That's right, no. Why? Because Blair House is already booked in early January for administration receptions and gatherings rendering the space quote "unsuitable for full time occupancy by the Obamas.". In other words, no to the Obama family because the Bush White House doesn't want to move its party location across the street or be inconvenienced in celebrating all their self proclaimed achievements. Because you know, there are so many.

The Obama transition has declined to make an issue out of any of this, but I will. This is outrageous and insulting, however, I have a solution. If the Bush Administration will allow the Obama family to move into Blair House as they requested, I will offer my house in Georgetown for the various Bush team receptions. I'll make nice h'dourves and mixed drinks including a cocktail we can nickname "to hell with the constitution" and another I'll call no WMD no problem. The back patio is very nice and anybody who wants to sleep off the night can do so in my basement. And don't worry about the basement mouse problem. I'll put the same kind of effort in fixing it as your effort to seek honest pre-war intel. Deal?

Decision 2008, still. But a decision on absentee ballots in the Minnesota senate recount could tip the balance in Al Franken's favor. And from (inaudible) on the campaign trail to charmer on late night television, where the real John McCain please stand up?

Then on the Rachel Maddow show, it's an especially epic look at the life of Che Guevara and the film's director Steven Soderber will join Rachel.

But first, because they're not going away soon enough, the headlines breaking in the administration's 15 running scandals, Bushed.

Number three, tech-for-tat gate. The Bush Administration is planning to sign its first ever nuclear pact with a Middle Eastern country. The United Arab Ameritz. That would be the same UAE whose attempt to control some U.S. Ports were nixed in 2006. The same UAE that was used as a major hub for A que Quan (ph) to traffic Pakistani nuclear secrets, the same UAE whose largest training partner is Iran. So why would the Bush Administration support their bid for nuclear technology? Must be just a coincidence that the agreement comes after the UAE signed contracts with two American companies to develop its power program.

Number two, gitmo-gate. Former Attorney General John Ashcroft defending the administrations detention policy to the Hudson Union Society in New York saying quote "I think detaining people, removing them from the stream of battle by the collective wisdom of mankind has been a humanitarian act in terms of war circumstances." Even though the Red Cross in 2004 called the treatment of detainees in Guantanamo Bay cruel, inhumane and degrading. Perhaps the only way to understand Ashcroft's humanitarian aspects of Gitmo is in the context of something else he told the Hudson Union Society. That he makes his best decisions quote "when I have a lot of morphine in my system."

And number one, torture-gate. A bipartisan senate arms services report concluding that top officials including Donald Rumsfeld, Richard Meyers (ph) and Condoleezza Rice were responsible for what happened at Abu Ghraib prison. And not just a few bad apples in the ranks as the administration has repeatedly claimed. Bu even though the report proves that Bush, Rummy, Condee and all were directly responsible for the torture of detainees, which in turn put American soldiers in danger from a re-energized insurgency and even though they tried to hide their crimes and pin the blame on other people, there's still no indication they will ever face prosecution for what they did.

(COMMERCIAL BREAK)

SHUSTER: A correction to make. We had the wrong picture in best persons in the world showing Senator Judd Greg when we should have shown Senator Jon Kyl. We apologize.

A decision on some of the Minnesota senate recount ballots. Thousands more still hanging in the balance. And a witty and relaxed jovial guest on "The Letterman Show." John McCain? So who kidnapped you and used a body double during the presidential campaign?

(COMMERICAL BREAK)

SHUSTER: For those of you who actually thought the election was over, our second story on THE Countdown, decision 2008, the still ongoing senate battle in Minnesota. Well, the fate of some 6,665 challenged ballots still hangs in the balance. There's been some movement in the recount. The state canvassing board ruled today that some 1500 wrongly rejected absentee ballots will be now be counted. And the board recommended that the election night results of 133 missing ballots should count.

Right now incumbent Republican Senator Norm Coleman enjoys a 192 vote lead over Democrat Al Franken. But both the absentee ballots and the 133 election night results favor the challenger.

The Coleman campaign says it will be going to court over the absentee ballots but that's not all the senator might soon to going to court for. The FBI is investigation allegations that republican business funneled $75,000 to Senator Coleman through the company that Mrs. Coleman works for. The money came in at the same time that Coleman's home remodeling, including a new kitchen featured in his campaign ads started to go over budget. The senator is denying any wrongdoing.

The Mac is back and he's actually funny and gracious and fair.

Where was this guy during the election? That's next. This is Countdown.

(COMMERICAL BREAK)

SHUSTER: Arguably it was the night the wheels came off John McCain's bid to become president. Cancelling on David Letterman would have been one thing, but cancelling on Dave only to turn up on CBS's in house feed doing an interview with Katie Couric instead, when he was supposed to be back in Washington solving the economic crisis. Well it only got worse from there. And who was it again who filled in for Senator McCain at the last moment? Keith somebody?

Our fifth story in THE Countdown now imagined that none of that had ever happened. What if John McCain has shown up at the Ed Sullivan Theatre on September the 24th? Would he have been self deprecating and friendly? Those what-if's came to mind in the early morning hours to anyone that saw a kinder, gentler, funnier McCain back on the Late Show last night.

(BEGIIN VIDEO CLIP)

SENATOR JOHN MCCAIN (R) ARIZONA: Can I say thanks for having me come back, Dave.

DAVID LETTERMAN, CBS TALK SHOW HOSE: Well, thank you for coming back. You're always great to have on the program. You make me look good and I appreciate that. Even when you don't show up, you make me look good.

MCCAIN: You knew we had to bring that up.

(END VIDEO CLIP)

SHUSTER: The topic turned inevitably to the Blagojevich scandal.

(BEGIN VIDEO CLIP)

LETTERMAN: What do you do? What has your life been like since? I mean you go from going 1,000 miles an hour to a slower pace.

MCCAIN: I don't want to talk about the bleeping campaign, understand? If you think I'm going to go back to that bleeping situation, then bleep you.

LETTERAN: Okay, thank you. Whoa.

(END VIDEO CLIP)

SHUSTER: And here's something you don't get to say often on Countdown. Senator McCain agrees with Keith Olbermann who said it here first on Tuesday that Governor Blagojevich seems both stupid and crazy.

(BEGIN VIDEO CLIP)

LETTERMAN: Do you know this guy, the governor of Illinois?

MCCAIN: He came to my office one time after he was elected governor at his request and told me, he was going to be a great reformer.

LETTERMAN: Really? Is that right?

MCCAIN: I'm not making it up. That he wanted to do like I had done in the senate and have all these reforms. I really must have impressed the guy.

(END VIDEO CLIP)

SHUSTER: Joining us obviously for our fifth story, our first story on THE Countdown wants to talk about Margaret Carlson Washington Editor of "The Week" magazine and a political columnist for "Bloomberg News." Hello Margaret.

MARGARET CARLSON, POLITICAL COLUMNIST: Hello David.

SHUSTER: So there was this McCain last night, where was that McCain during the campaign?

CARLSON: I'm sure he missed being that McCain but when the high priced handlers came in, they were afraid to let McCain be McCain. Most politicians it is a dangerous thing because many of them are closer to being Rod Blagojevich then they are Abe Lincoln. So you don't want them having to be bleeped out. So the handlers come in and it's their job and then they control people and they put them out of reach of the press.

McCain is the one person that shouldn't have been done to because he's a natural. And he's not anything like Blagojevich so it was safe to keep him there. But as you know Dave the handlers have to have a reason for charging their hourly fees so they do so.

SHUSTER: Well, you know, I spent 3 ½ months on the McCain straight talk express eight years ago. The McCain that we saw last night, that was the same John McCain that so many of us saw in 2000, the McCain that would joke with SHUSTERs on the back of his campaign us, needle us, needle us in front of crowds. All of that before the media became the purported enemy.

CARLSON: And David as you recall, he never blurted out anything that caused him any trouble. I mean the McCain, I think of him as the McCain of the sprinkled doughnuts because he used to have that - the sugar and the colored sprinkles coming off his tie. But do you ever remember him making some huge gaffe?

SHUSTER: No. I mean I remember one point where he seemed to get caught in terms of - he was asked about his pro life position in regards to what happened if his daughter got pregnant and his answer wasn't perfect, but again, when you consider the number of hours that he would have these rolling news conferences, the number of mistakes that other people make. But in any case, Bob Dole, he sort of made a similar post election appearance on Letterman in 1996. Leaving so many people to say the same thing; if only we had seen this guy on the campaign trail. Are there lessons to be learned from all the candidates when they're free of handlers and spinners and pollsters?

CARLSON: Well as a SHUSTER, I think there should be no spinners and handlers. It's much better to have the candidates be their authentic selves. Yesterday there was a lot of talk. Why wasn't President-elect Obama angrier? Well, that's not him. And when you're yourself, or you try to be, it's a much easier way to be. But Bob Dole was really in a straight jacket his whole campaign and he's a natural wit, but it's very dry. And dry wit is very dangerous because, you know, you say ironic things and people don't get the irony and then you find yourself in trouble.

SHUSTER: And of course the other thing about last night, it certainly seemed like John McCain seemed awfully relieved and I suppose, given the days that this country is facing right now, I suppose you can't blame him, right?

CARLSON: No, who wouldn't be? You know, David, he has not been seen around the auto bailout, those discussions. They've been led by other people. And after having gone to save, you know, the banks and the financial institutions, he seems to have hung up his gloves as far as the bailouts are concerned and enjoying being a senator.

SHUSTER: Margaret Carlson of "Bloomberg News", we enjoy having you here. Thanks for being with us tonight. Have a great weekend.

CARLSON: Thanks, David, you too.

SHUSTER: And that is Countdown for this, the 2,043rd day since the declaration of mission accomplished in Iraq. I'm David Shuster in for Keith Olbermann. Keith will be back Monday with his second installment of Countdown's list of the 25 most financially corrupt politicians in this nation's history. Our MSNBC coverage continues now with the "Rachel Maddow Show."

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. END